GBP/USD backed up by 2009 highs

Technical Analysis

EUR/USD breaks 1.35

“The gradual widening in interest rate differentials in favour of the U.S. also adds to the argument that EURUSD has scope to fall further as we target 1.32 on our trade recommendation.”

- BNP Paribas (based on CNBC)

• Pair’s Outlook

  Regardless of the bullish indicators on a monthly time-frame, EUR/USD has finally closed beneath the major level at 1.35, meaning the currency pair has now confirmed its long-term bearish intentions. The immediate support is at 1.3467/61, represented by the weekly S1 and Bollinger band and followed by the monthly S2 at 1.3436. Ultimately the price could fall down to 1.28 (2013 lows), before the bulls can regain control of the market.

• Traders’ Sentiment

  There was no strong reaction of the SWFX market regarding a precipitous decline in the value of the Euro—the share of long positions fell only two percentage points to 55%. But the portion of buy orders surged—from 36% to 57%.

GBP/USD backed up by 2009 highs

“We are more likely to see a rate hike from the Bank of England in 2014 than we are from the European Central Bank or the Federal Reserve.”

- Nomura (based on Bloomberg)

• Pair’s Outlook

  As long as the support at 1.7054/19 remains intact, there is a good chance the bullish momentum of the Cable is going to be restored and the rate will eventually rise up to 1.74. Conversely, if this demand area gives up, the monthly PP and 55-day SMA at 1.6973/50 will become the next target. In this case the up-trend and 100-day SMA at 1.6886/21 could also be tested, even though there are more ‘buy’ signals than the ‘sell’ ones on the monthly chart.

• Traders’ Sentiment

  The gap between the bullish and bearish traders has narrowed since the last report—from 44 percentage points to 38. In the meantime, there seems to be no significant difference between the amounts of buy (45%) and sell (55%) orders.

USD/JPY heads towards monthly pivot point

Inflation “continues to be on a rising trend in the U.S. It fits nicely to the view the Fed might raise rates sooner rather than later.”

- Western Union (based on Reuters)

• Pair’s Outlook

  The U.S. Dollar continues to strengthen against the Yen and is about to touch one of the main resistances that lie overhead. Even if USD/JPY overcomes the initial supply zone, created by the monthly PP and 55-day SMA, there will still be a down-trend and 100-day SMA just above 102 that are going to try prevent further appreciation of the Buck. Nevertheless, many experts agree the rate will rise at least to 103 before the end of the third quarter.

• Traders’ Sentiment

  Although the sentiment towards USD/JPY remains bullish, there was a surprisingly large decrease in the share of long positions—from 70% to 61%, while we are used to seeing 70% or more traders expecting a rally (10-day average is at 72%).

USD/CHF closes above 0.90

“Investors bought the dollar, with some convinced the Federal Reserve will raise interest rates as early as March.”

- MarketWatch

• Pair’s Outlook

  Despite the resistance at 0.90 that stopped strong advancement of USD/CHF in May, USD/CHF managed to rally above this level yesterday. Accordingly, we may now look at the 2014 high (0.9156) as a potential target, though the pair will have to breach the monthly R2 at 0.9096 first. Meanwhile, the monthly technical studies are against such a scenario—a half of them are suggesting the Dollar is going to fall, the rest are neutral.

• Traders’ Sentiment

  A jump in the price of the U.S. Dollar did not affect the overall distribution between the longs (72%) and shorts (28%), but it did change the situation in the nearby pending orders—43% are to buy and 57% are to sell the Greenback against the Franc.